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CloudStock web startup brings young investors and advisers together

New social platform uses gamification to teach Millennials about the stock market

A web startup created by a group of 20-somethings is using social networking and gamification to teach young investors about the stock market and connect them with investment professionals.

Called CloudStock, the social-networking platform is now in closed beta but will switch to public beta next week and be fully released in October, according to Ann Calvin, sales and marketing manager.

The free platform, which is integrated with the New York Stock Exchange, lets users simulate trades with “fake money” as they connect with friends, other Millennial investors and financial advisers on the site, Ms. Calvin said. Users also can link their CloudStock accounts with actual online brokerage accounts.

“CloudStock does it with fake money, so people can do as many trades as they want without the pain,” she said. “And then if they want advice and investments outside of the theoretical world, they would go to an adviser for that. We get them engaged and happy on our platform, and then they do the sensible thing and go to an adviser and invest in exchange- traded funds and mutual funds.”

Located in Boston's financial district, CloudStock shares staff and office space with software engineering firm Arcus Solutions, which was founded in 2013 and released the startup platform as its first proprietary project for beta, according to Arcus' website.

David Thor is Arcus' founder and managing director and CloudStock's founder, chief executive and front-end engineer. He was previously employed at PayPal Inc., where he worked to develop the online payments giant's Android application.

All of the startup's four team members are 24 or 25, and several of the staffers met while students at Northeastern University, Ms. Calvin said. She declined to state particulars about the startup's funding and said revenue models will come soon. CloudStock's monetization plans include offering paid premium features as well as advertising, she said.

P.J. Wallin, a 33-year-old certified financial planner and CPA who serves as lead adviser at Atlas Financial in Richmond, Va., has studied a number of cloud-based services in beta mode, and he warns that while ideas presented on a well-designed platform can help manage investor behaviors in a good way, those ideas also might lead investors astray.

“You could pick your friends or you could pick your stocks or you could pick your friend's stocks,” Mr. Wallin said. “But if it goes in the right direction, it could be extremely powerful. Behaviorally, though, a lot of people like to have that hot stock tip at a cocktail party. This seems to me like an online version of that. The issue is, what are people's backgrounds and how do you know whether somebody is an expert? Or, do they just have a herd opinion about a stock?”

Ms. Calvin said fear and anxiety has informed much of her generation's attitude toward the markets, and said she's a prime example. Her father lost his job during the dotcom crash and she graduated from college burdened by student debt, like many of her peers.

“Millennials are overinvested in cash,” she said. “We're worried about the next crash, so we're not saving for retirement or investing in the market. There's not a tool out there that speaks the Millennials' language, so we made one with a social network.”

Emily Dahlgaard, a full-time public affairs coordinator at the Greater Boston Chamber of Commerce and a communications adviser to CloudStock, said she joined the platform in beta and has found it to be a useful resource.

“Cloudstock teaches me about risk,” said Ms. Dahlgaard, a Millennial investor herself. “Maybe I have a friend who earns a lot of money in the stock market, and in here I can learn from the experts or see the mistakes that people make. Before I started using CloudStock, I was pretty risk-averse, and now I'm more interested in little risks and considering investment options. I have done more investing since I joined the CloudStock platform, some of it online. I prefer online.”

CloudStock is scheduled to present a demo Nov. 4 at the Boston TechBreakfast at Microsoft Corp.'s New England Research & Development Center in Cambridge, Mass.

Microsoft is a founding sponsor of the Boston TechBreakfast, which is part of event group TechCombustion's network of monthly TechBreakfast events in nine U.S. cities nationwide. The free events bring together entrepreneurs, developers, designers, business people and angel investors.